Goods Returns Strain Online Shopping Supply Chain : NPR

A sharp increase in online shopping this year means an increased number of things consumers will want to return. But the supply chain made to quickly deliver goods is not so nimble in the reverse. ARI SHAPIRO, HOST: All right. Admit it. There is at least one present that was […]

A sharp increase in online shopping this year means an increased number of things consumers will want to return. But the supply chain made to quickly deliver goods is not so nimble in the reverse.



ARI SHAPIRO, HOST:

All right. Admit it. There is at least one present that was wrapped up under that tree that you are going to send back. And that means a lot of those gifts that were ordered in a year that shattered online shopping records will be returned, which will likely create a logistics logjam in reverse. NPR’s David Schaper reports.

(SOUNDBITE OF GIFT UNWRAPPING)

DAVID SCHAPER, BYLINE: We’ve all been there, unwrapping that gift you really didn’t want.

(SOUNDBITE OF FILM, “A CHRISTMAS STORY”)

MELINDA DILLON: (As Mrs. Parker) Ralphie, show everybody what Aunt Clara gave you.

PETER BILLINGSLEY: (As Ralphie Parker) I don’t want to.

SCHAPER: Remember in “A Christmas Story,” before Ralphie opens up his official Red Ryder carbine action 200-shot range model air rifle, he unwraps that hideous pink bunny costume.

(SOUNDBITE OF FILM, “A CHRISTMAS STORY”)

DARREN MCGAVIN: (As Mr. Parker) He looks like a deranged Easter bunny.

IAN PETRELLA: (As Randy Parker, laughing)

DILLON: (As Mrs. Parker) He does not (laughter).

MCGAVIN: (As Mr. Parker) He does, too. He looks like a pink nightmare.

SCHAPER: If Aunt Clara ordered that bunny suit today, Ralphie would immediately get on his iPhone to figure out how to get FedEx or UPS to pick it up and send it back because that’s what millions of Americans will be doing in the days after Christmas.

MATT WALASZEK: This holiday season is proving to be unlike any other.

SCHAPER: That’s Matt Walaszek of the commercial real estate firm CBRE. His report finds that 30% of what we bought online for the holidays will be returned, amounting to a whopping $70 billion worth of products. And he says the supply chain isn’t set up to take it all back.

WALASZEK: It’s incredibly inefficient and does eat into the retailers’ bottom line.

SCHAPER: Products that are returned don’t follow the same path on which they were delivered. The reverse supply chain is much more complicated, depending on whether it’s picked up from your home, returned to a retail store or dropped off at a post office, FedEx or UPS location.

Tony Sciarrotta heads the Reverse Logistics Association and says once picked up, returned products usually can’t go back to their original distribution centers.

TONY SCIARROTTA: We’re running out of warehouse space.

SCHAPER: In addition, Sciarrotta says processing returns takes many more hands than delivering products from the manufacturer.

SCIARROTTA: It’s estimated that on the forward side, products are touched seven times before a consumer owns it. On the reverse side, products are touched two to three times that many times, could be 14 to 21 touches.

SCHAPER: If returned to a brick-and-mortar store, the product has to be examined to see if it can be reshelved or has to go elsewhere to be repaired or liquidated. If returned to a warehouse, there’s a similar process there.

SCIARROTTA: There’s so many touch points, and that costs money.

SCHAPER: Real money, in the billions of dollars.

SCIARROTTA: It is not sustainable to have a 30% returns rate as an e-commerce retailer and have to lose money on all those returns.

SCHAPER: But just like free shipping, online retailers promote free, easy returns because happy customers are often repeat customers. So it’s critical for retailers to get the logistics of returns right, too. Some retailers are teaming up to make the return process more efficient. For example, Amazon products can be returned to Kohl’s department stores. FedEx is partnering with Walgreens, and smaller e-retailers are turning to brick-and-mortar startups, like Happy Returns. But reverse logistics still is a long way to go to catch up with the speedy next day and the same-day delivery supply chain that we’re getting used to.

David Schaper, NPR News.

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